Planning for Life

The Massachusetts Probate Courts have created useful forms for use in its proceedings, but sometimes the forms don't fit the exactly the facts or situation petitioners want to present to the court. In the case of Leighton v. Hallstrom (Mass. App. Ct. No. 17-P-1335, Nov. 7, 2018), Robert H. Olson of Bridgewater died in 2015 without a will. His first cousin, Dorothy A. Leighton, filed a petition for probate listing herself and two other cousins as next of kin.

Bengt Hallstrom, of Uddevalla Sweden, filed a notice of appearance on which he checked the box saying that he was not objecting to the proceeding. His counsel also sent a letter to Leighton's counsel containing a genealogical chart showing that he was a cousin of Olson on his mother's side. The letter stated "I have not listed it as an objection since it is my understanding by doing so will cause a contest in this matter." In other words, Hallstrom was not objecting to the proceeding, just to the listing of next of kin. A guardian ad litem who was appointed by the court issued a report stating, "The issue of determining heirs can be addressed during the course of the handling of the estate."

With the threshold for federal estate taxes set at $5.49 million this year (it adjusts each year for inflation), very few estates have to file a federal estate tax return. In contrast, the Massachusetts threshold is $1 million, meaning that many more estates must file a Massachusetts return. For estates that fall between $1 million and $5.49 million, it can still make sense to file a federal return if the decedent left a surviving spouse.

When can an attorney-in-fact change an estate plan for her own benefit? When it's what the grantor or the durable power of attorney wants. In Giroux v. Laranjo, et al. (Bristol Probate Court Docket Nos. BR15F0006QC and BR13P2422EA, March 4, 2016), the court upholds the validity of a schedule of trust beneficiaries executed by Patricia A. Giroux as attorney-in-fact for Joseph A. Peixoto even though she stood to gain a considerable amount from its execution.

If a Massachusetts resident dies owning real estate outside of the state or the country, can Massachusetts tax it in your estate? If you look at Massachusetts law, the answer is "yes." This is because the Massachusetts estate tax is calculated as the federal estate tax credit that was available under the federal estate tax in place back in 2000. Since the federal taxable estate includes all the decedent's property wherever held, the Massachusetts tax does as well.

Probate is the process through which after death your possessions are passed on to whichever individuals and charities you name in your will. If you don't have a will, your property passes under what are called the rules of "intestacy" which means that state law determines who gets what -- essentially your closest relatives.

Governor Charles Baker's FY 2017 budget includes a proposal to expand MassHealth estate recovery to include non-probate property. Currently, MassHealth recoups its expenditures from the probate estates of individuals who received coverage of nursing home care or any other MassHealth benefits after age 55.

In general under the 2005 Bankruptcy Code, IRAs and other retirement accounts, such as 401(k)s and SEP plans, are protected in the event of bankruptcy by the owner -- one more reason to fund your retirement plan with as much as possible. But what about an inherited IRA? The U.S. Supreme Court recently decided in Clark v. Rameker that they do not enjoy any bankruptcy protection.

A father lends money to his son and daughter-in-law secured by a mortgage, and forgives the debt in his will. When the father dies the son's promissory note is the estate's sole asset and without payment on it the estate cannot afford to pay creditors or the expenses of administration.

These are the basic facts of a Florida case, Lauritsen v. Wallace. The probate court holds that the debt forgiveness is effective on the moment of death, but on appeal the Appeals Court reverses finding that the son has to pay on the note enough to cover the estate's debts and the costs of administration.